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I will be at the Prop 8 protests on Saturday, November 15.


I can't figure what sign I would make, or what I would want to say. I know it's petty to talk about money, but when I was in a relationship, estate taxes were a big worry. I own my house outright. We could have done a joint lease or something, but then I would have lost all the tax benefits from owning a house.

I already have maxed out the effective exclusionary amount, so if I die, my partner would have to come up with a quarter million dollars for the IRS. Since my estate wouldn't have that much liquid cash, my partner would probably have to sell the house. To me, that was a big difference between being married and being in a "civil partnership"... cold hard cash.

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You could have put the property in a revocable trust that you were both joint trustees of, then when one of you dies, the other one becomes the sole trustee.

Yeah, I mention that above. But in Colorado, I would have lost the tax credit from being a single owner of the house. Sure, the trust would have gotten to deduct mortgage interest, but that wouldn't have done me any good. One of the reasons I could *afford* the house was because of the tax benefits.

Sorry, I didn't pick that up from 'joint lease'. We are joint trustees of our property and we get to decide how to apportion the mortgage interest for tax relief (50%/50% in our case).

To make things more complicated, when we were together, my ex still owned a house of his own and rented it out. So that was his mortgage tax deduction, and we didn't want to make it look like he owned a second house.

Are you sure? I've talked to a number of people who have misunderstood the tax situation with their homes. Having explored the subject in some depth, I'd be interested in knowing what particular taxes you are concerned about.

I'm a little confused because in one paragraph you suggest you aren't in a relationship anymore but in the next you suggest that you are.

Is the current situation really more complicated than a divorce would be / have been? My impression, quite honestly, is that for straight people, marriage has caused as much financial heartache as it has prevented. In part because it's so easy to do that people don't think through the consequences.

If I die tomorrow, my estate will be worth a little over three million dollars. Of that, two million is stock in a family company that can't be easily sold or transfered to a non-family member. That eats up my effective exclusionary amount. So, I would be leaving my domestic partner a million dollar house, which would be taxed at the federal rate, currently $345,800. If I was married, the tax would be zero.

In 2009, the exclusion amount goes up to $3.5 million, so my point become moot. Who knows what estate taxes will look like under and Obama administration.

No, I'm single. We broke up in May of this year. I was speaking methaphorically, as in "my partner-if-I-had-one would have to pay estate tax". However, my ex is still the sole beneficiary of my will, since I can't think of anybody better to leave everything to.

Hm, that is an interesting situation. I gather that he can't inherit the stock. Would you be able to specify in your will that whoever gets the stock has to pay the tax?

If you are interested in him inheriting the house, have you looked into adding him to the deed as a joint tenant? That way the house is no longer part of your estate when you die. However, it's not something you can undo if you change your mind down the road.

We've done this twice now - the first time when John made me a JT on the San Jose house, which allowed us to later claim TWO deductions on the profit and pay no tax at all on the proceeds. The second time was when Bill made us both JTs on our current property. (I'm still a little nervous about this because it seems odd to me that the IRS wouldn't have their hands in our agreement somehow, but I can't find any reason to believe they would.) The only thing that we have to deal with is that if Bill dies the tax basis on the land resets to the current value. (That might actually end up reducing our taxes given that values have gone down recently.)

You sound pretty well informed so maybe this is all redundant... quite honestly the joint tenancy approach strikes me as odd because it looks rather too easy to shuffle wealth around without taxes, so there has got to be a catch SOMEWHERE. But I haven't found one!

>Hm, that is an interesting situation. I gather
>that he can't inherit the stock. Would you be
>able to specify in your will that whoever gets
>the stock has to pay the tax?

Yes, it's very tricky. If my estate wanted to cash out my 7% interest in the family company, they would have a tough time coming up with two million dollars. In the worst case, it could sink the company for years. So, there is a payoff schedule, but that could extend long past when estate taxes are due.

>If you are interested in him inheriting the
house, have you looked into adding him to the
>deed as a joint tenant?

Well, I'm single now, and nobody lives in the house, so it's no longer an issue. But I don't think joint tenancy is a "get out of jail free" card. It would have created other problems: his other existing property, I might have lost the yearly tax benefits, and as you said it's harder to remove. In the worst case, your divorced partner could take out second or third mortgages on the property and royally screw you.

>quite honestly the joint tenancy approach strikes
>me as odd because it looks rather too easy

It's unfair that as gay people we have to perform such contortions in order to live together.

I realize that this is a hypothetical issue... but I have to say, joint tenancy is not at all a contortion, it takes about 15 minutes (literally) to visit the notary and register the deed. As with marriage, it's wise to have a legal agreement that handles the conflicts that might arise in the future.

It is not identical to marriage, but it is so similar in so many respects that wanting marriage while shying away from joint tenancy might be a sign that marriage isn't what you really want!

This is a can of worms. Tenancy in common might have solved my inheritance issues. But you know, it's not even a tenth of real marriage. It doesn't address adoption, insurance, immigration, or the other thousand federal rights that marriage gives. It's more of a kludge... which was my contortion comment.


I'd be scared that you would never be able to break up: the ex has a permanent right to the property, even if I paid the entire mortgage. Or vice versa... my ex could be responsible for all my debts after my death - even in EXCESS of the value of the house.

What a fucking mess.

I'd be scared that you would never be able to break up

Not breaking up is sort of the point. Joint tenancy is in some ways more of a marriage than marriage itself. Ironically marriage is therefore attractive because it makes divorcing so much simpler...

Well, when I wanted to get out of my relationship last May, the last thing I needed was for an emotional relationship to be decided by a lawyer's consultation. Staying together because we couldn't afford breaking up - that idea is too horrible to consider.

Like a lot of things, if there are not problems, joint tenancy is great. But if your partner goes psycho and wants to screw you... he could get multiple liens on your house, to the point you'd lose your home. Laws were created when things *don't* work. As long as life is good, EVERYONE stays out of the courts and the jails.

If my love life is wonderful it doesn't relieve the necessity for legal protection for the rest of the world.

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Are you a non-profit? {grin}

>Is the current situation really more complicated
>than a divorce would be / have been?

Tough question. Since we weren't legally married, we didn't have a template of what to do when we broke up. We've managed an equitable settlement without using lawyers, but I still feel like I steamrolled my ex through some complicated financial decision. I was the numbers guy... not him.

I'm hoping I can sell my house in Denver and give him $100,000 of the proceeds to help him with retirement. It's important for me to make sure his house and car are paid off next year, so he can go on with a life without me.

Plus, there is the basic question of equality. You might say there is a way I could acheive the equivalent tax status of a straight couple, but while their benefits come automatically from marriage, I would have to set up an irrevocable trust? Those trusts can be complicated and expensive to set up... and to dissolve.

I was tired of changing my will every time my financial situation changed, just because my civil partner didn't automatically inherit my property. The question is whether the United States wants gay couples to unite and be able to afford a life together. At this point, the answer is clearly, "No." They want us to convert and stop being gay. They want us to go away. They are using laws to get that point across.

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As I state above, I looked into that. Setting up a trust would have eliminated the tax benefits. Plus, it would have been difficult to dissolve. It is nowhere near equivalent to marriage, even for this one issue.

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Thanks! I'm glad it worked for you. For there were downsides that you probably didn't see. I'm not sure you (or your parents) could have used the house as an asset for a second mortgage or the like. Also, if your parents were short on cash and wanted to back out, all siblings would have had to dissolve the trust. But like I say above, when it works, it works.

I vote for you never dying. Or at least waiting till after I get a chance to do completely perverted things to your (still living) body.

i'm planning on going to my local protest tomorrow

Wow. I think I need to talk to my accountant about this one (and I need to get a will going since I own property -denial of death). And it's good to be knowledgable, and prepared for the next relationship to come along. Kudos to you for thinking and taking care of your ex. Your a good man. (The "If I die" icon you have here would make a good sign)

You know I understand this situation.
I'm not going to wade into this discussion with advice or suggestions.
I know that transfers between a husband and wife are not taxable.
We used that several times to build my parent's estate plan.
We need civil union rights to be equal to Marriage rights.
It could be "separate but equal" but it is not going to be.
That's why we are out there on the line making noise.

I find it idiotic that smart lawyers for gay and straight people in civil partnerships can't seem to get the wording right when they draw up these things.

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